A pooling equilibrium in
game theory
Game theory is the study of mathematical models of strategic interactions. It has applications in many fields of social science, and is used extensively in economics, logic, systems science and computer science. Initially, game theory addressed ...
is an
equilibrium
Equilibrium may refer to:
Film and television
* ''Equilibrium'' (film), a 2002 science fiction film
* '' The Story of Three Loves'', also known as ''Equilibrium'', a 1953 romantic anthology film
* "Equilibrium" (''seaQuest 2032'')
* ''Equilibr ...
outcome of a
signaling game
In game theory, a signaling game is a type of a dynamic game, dynamic Bayesian game.Subsection 8.2.2 in Fudenberg Trole 1991, pp. 326–331
The essence of a signaling game is that one player takes action, the signal, to convey information to anot ...
.
In a
signaling game
In game theory, a signaling game is a type of a dynamic game, dynamic Bayesian game.Subsection 8.2.2 in Fudenberg Trole 1991, pp. 326–331
The essence of a signaling game is that one player takes action, the signal, to convey information to anot ...
, players send actions called "signals" to other players. These signals are based on
privately held information, which is not known to others in the game. These actions do reveal a player's "type" to other players, who then choose their
strategies accordingly. In a pooling equilibrium, all types of a given sender send the same signal. Some senders represent their true type, while others correctly mimic the type of others, having no
incentive
In general, incentives are anything that persuade a person or organization to alter their behavior to produce the desired outcome. The laws of economists and of behavior state that higher incentives amount to greater levels of effort and therefo ...
to differentiate themselves. As a result, the receiver acts as if they have received no information, maximizing their
utility
In economics, utility is a measure of a certain person's satisfaction from a certain state of the world. Over time, the term has been used with at least two meanings.
* In a normative context, utility refers to a goal or objective that we wish ...
according to their
prior
The term prior may refer to:
* Prior (ecclesiastical), the head of a priory (monastery)
* Prior convictions, the life history and previous convictions of a suspect or defendant in a criminal case
* Prior probability, in Bayesian statistics
* Prio ...
beliefs.
See also
*
Separating equilibrium
References
Game theory equilibrium concepts
Asymmetric information
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